It is such a pleasure to listen to you in the a.m. as well as the p.m. My children [19, 18, 13 ... all hardworking trying to balance part time jobs, academics and giving back to our community] also listen and many of your comments and tips about life spark lively discussion at our table. Thanks for the impact you have made on my boys!
My question today: How do you feel about investment life insurance [both term and permanent]. All the research I have done seems to be on the fence. Nothing concrete about it being really worthwhile. Our financial planner has presented it to us as an asset option. We are debating if this investment insurance would suit our portfolio or is investing in real estate, albeit outrageously expensive or possibly investing in mortgage lending more advantageous. Like many, we have no problem paying our fair share but have had it with the ‘pyramid of extortion’ and are trying to preserve what little money we can for a comfortable life, retirement and legacy.
Thanks, looking forward to your insight. Have a fabulous day!
Thanks for listening to AM640 and your kind words. I’m glad to hear that your sons are preparing themselves for the day when they take charge of their affairs. The central benefit of life insurance is it provides individuals with a risk management tool. Our greatest asset is our ability to earn income to support our families. The passing of the leaders in a family compounds the emotional distress that emerges from the loss with financial dislocation. Insurance provides a financial benefit that allows the surviving members to continue with the life outcomes intended.
Estate preservation is a benefit that permanent insurance can offer. You pay a higher premium for permanent insurance part of which pays for the risk management benefit and the rest goes into an investment fund. When the last surviving spouse in a couple passes the death benefit can help offset taxes owing on assets such as cottages and rental properties. Sadly most assets often have to be sold to pay the capital gains taxes owing on non sheltered investments.
In addition permanent insurance provides a judgement proof asset that creditors can’t attach.
You and your husband need to decide which if any or all of these characteristics of insurance best meet your needs. With two children who are 18 or older you might consider sheltering assets in their individual TFSA to realize tax free growth within the family. As far as investing in real estate until interest rates start moving higher I think there is more gas in the tank. With mortgages make sure you know exactly how the process works so you can avoid getting skinned like all the bankers in the subprime mortgage debacle.
Next time I will advise Robert on how best to proceed with a $100,000 inheritance and a relocation.
Make it a profitable day and happy capitalism!